OKX freezed user's account for failing to complete facial recognition KYC

[Karl_3000]

The account was registered on OKX in 2023, the person was known just of a recent that he used fake KYC documents to register on the exchange. The person wanted to withdraw $40000, he said the money want to be used for his father medical treatment.

I do not think OKX would have suspected anything if not because the person wants to withdraw huge amount of money at once. I have noticed this on exchanges before. Let us say for example the person was only withdrawing $1000 for a long period of time, the exchange might not have known.

But in short the person was unable to provide facial verification, the coin was seized. I do not know the reason someone should have such huge amount of money on an exchange.

https://www.tradingview.com/news/cointelegraph:4a4a42a9c094b:0-okx-founder-defends-asset-freezes-after-user-admits-buying-kyc-accounts/

As the money has been seized, will the money be stolen by OKX or the money will be given to the government of the country the person is living which I think is the most appropriate thing that should be done.

This is an evidence that fake KYC truly exists
There are downside of fake KYC but fake KYC is highly possible, this case is a very good example that it is very possible. There are still many people that have the fake KYC but only few people will be known. They have ways to pass the KYC verification. It is good for people to be very careful of the places online that they are giving their personal information because your personal information can be sold online and be used for verification.

[casey15]

Well.. I don't really think it is a very big issue. If the person is able to provide adequate documents and  verify KYC then his money will be released. No the coins will not be stolen by the exchange, and they will not be given to the government, since it is frozen, it simply means he cannot access it except he has completed the KYC.. this is probably because if the amount he is trying to withdraw. It could be the first time he is making such big transaction on the account so they want to make sure he is verified Incase there is a legal issue associated, he can easily be tracked and OKX will not be held responsible...

[Sticky Bomb]

I do not think OKX would have suspected anything if not because the person wants to withdraw huge amount of money at once. I have noticed this on exchanges before. Let us say for example the person was only withdrawing $1000 for a long period of time, the exchange might not have known.

I think this is another rule introduced by exchanges to help curb fraud, if you don't log into your account for a while, whenever you intend moving funds from it, you must provide email and facial verification to move funds, I have seen this in Binance, especially if more than one account is accessed from the same device.

But in short the person was unable to provide facial verification, the coin was seized. I do not know the reason someone should have such huge amount of money on an exchange.

This is the mistake of the person, having such funds in a centralized platform is  far from wisdom. He wouldn't have experienced such if he used a self-custody wallet.

This is an evidence that fake KYC truly exists
There are downside of fake KYC but fake KYC is highly possible, this case is a very good example that it is very possible. There are still many people that have the fake KYC but only few people will be known. They have ways to pass the KYC verification. It is good for people to be very careful of the places online that they are giving their personal information because your personal information can be sold online and be used for verification.

I think information leak is not the main basics of the funds seizure but the person in question bought the OKX account from someone as is done by users to bypass regulations in countries like China, so he is not able to provide facial verification since his face does not match the picture in the KYC documents submitted by the previous user. Buying and selling of accounts too is strictly prohibited by OKX service terms of use, so this case is very complicated. I don't think he stands a chance to retrieve those funds.

[Oshosondy]

No the coins will not be stolen by the exchange, and they will not be given to the government, since it is frozen, it simply means he cannot access it except he has completed the KYC.

The coin is not frozen on the blockchain but it is frozen on the exchange by the exchange.

The conclusion is that the person has been unable to pass facial recognition and that fake KYC was used to open the account in 2023. I do not think the coins will be given back to the person.

I think this is another rule introduced by exchanges to help curb fraud, if you don't log into your account for a while, whenever you intend moving funds from it, you must provide email and facial verification to move funds, I have seen this in Binance, especially if more than one account is accessed from the same device.

This is not existing on Binance but Binance will request for login which can easily be bypassed with your passkey if you set it.

[Wiwo]

KYC passed under fake IDs and now the exchange is requesting for facial verification, which is impossible given that he did not own the documents use to verify the account in the first place, the $40,000 is gone because the exchange already suspected the account that is why their are asking for face verifications.

As for the money, just like the balance in a dormant account, is either the bank manager or the cashier have a share of it which means probability the exchange will end up with the coin if he is unable to meet the verification requirements.

[un_rank]

I am siding with the exchange here. It is rule breaking regardless of the purpose of the withdrawal, there is no way to know that the account was really sold and not hacked and what happens if the original owner tries to recover funds with the registered information? This is a huge risk to have so much money in an account that was not originally yours.
I also do sympathize with people in regions that crypto is banned, finding ways around such restrictions is very difficult.

At the end, it says that Xu gave a way the user can recover the funds -

While buying verified accounts is a legal gray area, Xu said that the platform may still help clear the user's assets, provided that he fulfills three criteria.

First, the individuals who sold the Know Your Customer (KYC)-passed account must “explicitly disclaim” ownership of the funds. Second, the accounts need to be clear of judicial freezes and law enforcement investigations. Lastly, the accounts need to provide “verifiable” proof of funds sources that meet regulatory requirements.

3 steps for the user to pass to hopefully be able to recover their funds.

- Jay -

[Aanuoluwatofunmi]

The account was registered on OKX in 2023, the person was known just of a recent that he used fake KYC documents to register on the exchange. The person wanted to withdraw $40000, he said the money want to be used for his father medical treatment.

I do not think OKX would have suspected anything if not because the person wants to withdraw huge amount of money at once. I have noticed this on exchanges before. Let us say for example the person was only withdrawing $1000 for a long period of time, the exchange might not have known.

How on earth could someone have up to this amount of money only to discover that it was on a centralized exchange, this shows that to this time some are not quite aware of the needs to understand the difference between a custodial wallet and a non custodial wallet, because exchanges are being regulated and they behave in a similar manner like the banks, they can decide to freeze our money for any reason, not your keys not your coins, its only a pity because of the condition and the need arising for the need of the money as the father was in need for medical treatment.

[tvplus006]

Well.. I don't really think it is a very big issue. If the person is able to provide adequate documents and  verify KYC then his money will be released. No the coins will not be stolen by the exchange, and they will not be given to the government, since it is frozen, it simply means he cannot access it except he has completed the KYC.. this is probably because if the amount he is trying to withdraw. It could be the first time he is making such big transaction on the account so they want to make sure he is verified Incase there is a legal issue associated, he can easily be tracked and OKX will not be held responsible...

The article says that these accounts were verified for forged documents. Accordingly, if the person whose documents were previously KYC was unable to pass face recognition verification, then these 40 thousand USDG will be permanently blocked by the exchange. In this case, a refund is only possible for a verified user.

[bangjoe]

The account was registered on OKX in 2023, the person was known just of a recent that he used fake KYC documents to register on the exchange. The person wanted to withdraw $40000, he said the money want to be used for his father medical treatment.

I do not think OKX would have suspected anything if not because the person wants to withdraw huge amount of money at once. I have noticed this on exchanges before. Let us say for example the person was only withdrawing $1000 for a long period of time, the exchange might not have known.

But in short the person was unable to provide facial verification, the coin was seized. I do not know the reason someone should have such huge amount of money on an exchange.

https://www.tradingview.com/news/cointelegraph:4a4a42a9c094b:0-okx-founder-defends-asset-freezes-after-user-admits-buying-kyc-accounts/

As the money has been seized, will the money be stolen by OKX or the money will be given to the government of the country the person is living which I think is the most appropriate thing that should be done.

This is an evidence that fake KYC truly exists
There are downside of fake KYC but fake KYC is highly possible, this case is a very good example that it is very possible. There are still many people that have the fake KYC but only few people will be known. They have ways to pass the KYC verification. It is good for people to be very careful of the places online that they are giving their personal information because your personal information can be sold online and be used for verification.

This could indicate that the person who did the KYC before is not the same person who holds the account today therefore that user cannot do the KYC because it does not match anyway, this could be called fake KYC or it could also be that this account was stolen by someone, a hacker could do that too, and fortunately OKX has advanced user verification security, otherwise this money would go to a person who is not the owner of the data to fulfill KYC at OKX in the past. 

There is also a lot of KYC trading or exchange account trading out there, I often see it on facebook or telegram channels and others, and this could be one of those parts.

[Call_Me_Guru]

Trading and Gambling have had the highest number of confiscated funds in the story of the internet, some of them knowingly pretend sometimes for the customer to fall into their trap. Say no to the faking of data and verification, it backfires on your head in cases like this. If not for an ill-gotten money, why do fake verification? For privacy? Now that it has dragged him into more trouble, who is the loser?

We are talking about $40,000 withdraw, how much more the money remaining in the account could be? The guy must have been so blinded by the old successful transactions to have withdrew $40,000 at once without using his senses that he is using a fake identification that he couldn't confirm. That is the loss to him and gain to OKX.

It is not the case that the verification went through and OKX did not pay him but the case of him tying to outsmart the law and OKX. Cases like this are to be reported to the appropriate authority, it has been in the public domain, it has to be reported. But I don't know how soon that could be or how exchanges could play smart on the authorities to keep the money to themselves. I know they do it a lot.

[SilverCryptoBullet]

This is an evidence that fake KYC truly exists
There are downside of fake KYC but fake KYC is highly possible, this case is a very good example that it is very possible. There are still many people that have the fake KYC but only few people will be known. They have ways to pass the KYC verification. It is good for people to be very careful of the places online that they are giving their personal information because your personal information can be sold online and be used for verification.

If people use fake documents or AI videos for faking their identity for KYC, it's clearly that no centralized exchange tolerates this activity and account freeze or even termination is common practice. Users with such fake videos for KYC can appeal but let's say there is no chance of success if they did bad things by themselves, and they knew that.

Generally centralized exchanges are not good for storing funds.
Events made you scare about custodial wallets, centralized exchanges.

Particularly OKX exchange has bad history.
OKX frozen my account and required me to KYC with a less than $1,000 deposit.

[ColdLava40]

They have ways to pass the KYC verification. It is good for people to be very careful of the places online that they are giving their personal information because your personal information can be sold online and be used for verification.

I'm not sure he will be able to provide the required kyc request from the exchange. Why do people still use the fake kyc if they don't have something to hide. What's wrong with using your own documents to sign up.

He definitely won't be able to find the person who's face is recognised by the exchange because in case like this, the kyc documents much have been bought or stolen.

[sunsilk]

There are users that have successfully withdrawn more than that amount that's given with the example. The problem is not about the amount as long as he's the genuine owner of that account and the identity that's been sent to them.

While we don't really like being subjected to KYC upon withdrawing big amount. Should he use his own identity for that and not a fake one, he'd pass to the facial recognition.

Yes, we don't like KYC. But if it's your money involved in it, you don't use someone else's identity. And, never store big amounts on any exchange.

[rat03gopoh]

As the money has been seized, will the money be stolen by OKX or the money will be given to the government of the country the person is living which I think is the most appropriate thing that should be done.

These funds have actually changed the status to "assets in legal settlement." These assets are not owned until a court decision is issued, although they would become OKX's own property, for example, if used as operational reserves for the exchange. Therefore, this is perfectly legal for them (even if you consider it theft.

As long as OKX doesn't disclose these funds to the relevant authorities, they have no right to use even a single cent.

[Curious T]

They way I see it, I think the money is gone except he is able to provide the person he bought the account from, because according to the article the person needs to put out a disclaimer that he actually sold the account. Then there is the law enforcement he has to face and proof of funds sources. So unless he able to pass all these requirements, I don't think he is getting that money back.

[DubemIfedigbo001]

I think this is another rule introduced by exchanges to help curb fraud, if you don't log into your account for a while, whenever you intend moving funds from it, you must provide email and facial verification to move funds, I have seen this in Binance, especially if more than one account is accessed from the same device.

This is not existing on Binance but Binance will request for login which can easily be bypassed with your passkey if you set it.

I think I get what he is saying, more emphasis on the bolded sentence. When I was only accessing my Binance account from my phone, I didn't notice any issues because I use biometrics to login easily, but when I had to access more than one account and had to switch between it to manage assets in other accounts for my siblings, I noticed being asked for facial verification severally in the secondary accounts to even login , despite having set pass keys. I have experienced it firsthand, so he is actually correct.

If you have more than one account in the same device, most especially as it has different KYC documents linked to them, they ask for facial verification if session has timed out. I believe it is a form of fraud control to ensure the account is still operated by the person that provided KYC.

[Rikafip]

Nothing surprising here. He used fake documents to do KYC, and got caught when OKX asked for facial recognition. They basically did only thing that they can do, to freeze the account, as logical thing to assume is that imposter is trying to access someone else's account.

How on earth could someone have up to this amount of money only to discover that it was on a centralized exchange

Why do you think that person in question didn't know that he was using centralized exchange? I read the first post twice and OP didn't mention anything about that.

[KiaKia]

Facial recognition KYC is very easy to complete, if you can't complete it then something bis wrong on the users side, maybe they are trying to get away with passing KYC using fake ID or ID that belongs to someone else, a friend or family and when it's time to hold the ID in hand and also take a LIVE KYC verification they failed to comply.

This can trigger suspicious behaviour which could make the believe that the user is trying to cheat their system, no one should be facing such problem if they are clean and legit, something is definitely wrong from the user's side.

This will serve as a big warning to people who loves to buy their way around KYC verification using fake ID or borrowed ID, because when you are asked to verify it will become very hard unless you can provide the person that the ID belongs to.

[LTU_btc]

Nothing surprising here. He used fake documents to do KYC, and got caught when OKX asked for facial recognition. They basically did only thing that they can do, to freeze the account, as logical thing to assume is that imposter is trying to access someone else's account.

I hate KYC stuff, but dude who used fake documents for verification can blame only himself.  When you complete KYC, you accpet rules of exchange and at the same time you accepted risk to get caught. I understand frustration, but exchange just did what they were supposed to do. It will be expensive lesson that rules aren't made to be broken.

[Mrbluntzy]

Issues like this are complicated, he bought an account that has already been KYCed by someone else and he still go ahead to load $40,000 in the account, what was he expecting? This kind of incident always happen in some platforms, once they detect some abnormal activity on your account, they will request for extra verification to confirm that you are still the owner of the account. When he was trying to withdraw the money and they asked him for face verification, he should have contacted the person he bought the account from.

OKX doesn't have to steal the money unless it is linked to fraud and money laundering, if not, then they won't.  It will just be on the account until the face verification (face) that match with the KYC information (on that account) is received,  that's only when they can unlock the account.  According to the article you submitted, it says that the victim has admitted that he bought the account, so what can be demanded of him is for the account seller to do the face verification.